There are indications that the Federal Reserve''s interest hike program is starting to push the US housing market to cool down a bit.
While some argue that the unfettered home price rise we''ve had in the last few years must come to an end, others point to historically low inventory as a sign that any correction will be offset by persistent high demand.
Despite the fact that many businesses have experienced the slightest decline in demand, the evidence bringing out of many cities suggests.
Are Home Prices Truly Going Down?
According to a newmarket report from Redfin (RDFN) - Get Redfin Corporation Report, 19.1% of people selling their homes decreased their asking price in the four weeks ending on May 22. That''s the highest price reduction since October 2019.
"The picture of a weakening housing market" becomes more evident, particularly for home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates, according to Daryl Fairweather. "For the time being, mortgage rates have stabilized, and I expect prices to do the same."
The number of people on the market who are searching for homes on the market is also declining.Searches of "homes for sale" are up 13% from the same time in 2021.
ShowingTimefound, a home remodeling technology business, has dropped by 29 percent from January through May 22; home listingtimes, weekly pending sales, and the share of homes sold above the listing price have all been steadily declining after months of spiking.
Mortgage rates for 30-years slowed slightly to 5.1 percent in the week ending on May 26, but mortgage rates are still at their highest levels in many years.
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Mortgage purchase applications were down 16% from 2021. The average mortgage payment is a near-record high of $2,425. When interest rates were at 2.95% a year ago, the average family was only paying $1,708.
Can I Finally Buy That House?
This price decrease is preferred as a correction from astronomical growth rather than a trend downward.
According to Redfin, the median price of a home for sale is still up 16% from 2021 to a new high of $400,000. Newly listed homes are at an even higher $418,000.
The price of a house is so high that people would need to save for several decades to afford enough for a lower payment in some Western cities.
Many people who intend to sell their property have kept keeping off on putting it in the hopes that their future future will tense.
Others are listing homes at bargaining points above their market values, and this strategy has often proved effective, with some markets seeing bidding wars and all-cash offers.
As some markets adjust themselves to be more proportional to actual demand, current home sale patterns indicate that the period of "anything goes" might come to an end.
In most areas, it is still very high and a return to "affordability" is not imminent. In one year, the average time a house spends on the market decreased from 19 to 15 days. The number of homes selling above the listing price is 57%, thus it''s also 7% higher than it was a year ago.
"As long as a property is priced fairly, it still has a good chance of selling quickly," said Ryan.